July 27th, 2011
09:02 PM GMT
As my hometown gears up for the 2012 Olympic Games, its inhabitants are split between whether the event will be a giant money spinner or a massive hole in the pocket.
From east to west, north to south people can be heard bemoaning the dearth of tickets while bookmakers are touting the prospects of British athletes winning gold.
One thing remains indisputable: With the price of precious metals soaring, minting those London Olympic medals will be more expensive than ever before. And the games come as nervous investors continue to plough money into gold, the ultimate safe haven.
It’s not often you can make a connection between shaky securities and synchronized swimming, but this year may prove an exception.
The UK is producing 4,700 medals for next year’s Olympic and Paralympic Games. The eight tonnes of ore required for this sizeable feat will be provided exclusively by miner Rio Tinto, presumably much to the chagrin of its rival BHP Billiton - supplier of the metal for the last games in Beijing three years ago.
Charting the cost of gold over recent Olympic milestones illustrates just how much the precious metal has appreciated.
Since Seoul 1988 gold has picked up more speed than Usain Bolt in the men’s 100 metres: Its value has increased by more than 280%.
When Atlanta welcomed Olympians in 1996, the cost of the gold in the medals it handed out was around $480 a ‘troy ounce.’ By the time Sydney 2000 came around gold had actually slipped to about $310.
But then the credit crunch returned gold its Midas touch.
In 2008, as markets were reeling from the collapse of Lehman Brothers, China was welcoming the world’s sporting elite. Amidst great pomp and ceremony, it handed out some 302 gold and jade medals. At that time gold was worth $920 an ounce.
But here’s the catch. You’d think, as the ultimate accolade for sporting achievement, a gold medal would be made entirely of gold, right? Not so.
The gold medals handed out at ‘London 2012’ will contain 92.5% silver, while only 1.34% will be gold, and the rest copper.
Each gold medal will have a mandatory requirement of 6 grams of gold. At today’s prices that is worth $340 in total. It might seem like cheating, but the other metals aren’t exactly worthless.
Silver surpassed a 31-year high this year while copper - a significant component of the bronze medals - has been gaining for years on the back of sustained, high demand from Asia’s burgeoning economies.
Which means, although Olympic success is in itself priceless, everyone’s a winner.
About Business 360
CNN International's business anchors and correspondents get to grips with the issues affecting world business, and they want your questions and feedback.